Banking on Digital Finance

Not too long ago, digitalization of the financial field was an omissible topic within the global financial paradigm. As a space monopolized by incumbents, the banking industry has been ruled by an elite few for some time. In turn, this has stifled innovation.

However, with the rise of digital payment technology, and a raft of breakthrough innovations across the habitual wealth and investment frontier, consumer and commercial banking are now teetering on the cusp of significant digital transformation.

As the global banking sector reaches this digital tipping point, the changes to both the industry and the global economic status quo will be profound. With advancements in nascent technologies such as Blockchain, cloud computing, and Artificial Intelligence (AI), this is propelling an evolutionary shift forward across all industries. With the far-reaching effects of digitalization set to make their presence felt in banking, the digital deficit of trade and corporate banking is in line to prosper from leveraging smart solutions that will replace the antiquated systems of yesteryear.

The behind the scenes infrastructure of the banking industry is ripe for digitalization. Overall, this is encouraging a rethink of banking’s purpose and function in the digitally enriched societies of tomorrow. At Anglo-Gulf Trading Bank, we believe that disruption of the trade finance sector will empower a new era of economic growth potential. By delivering sophisticated and modern digital corporate trade finance solutions, the new banking proposition of tomorrow will enable customers to overcome the traditional barriers of the trade finance arena.

Banking on a digital finance industry is inherently good for all. Firstly, bridging the trade finance deficit with digital alternatives will deliver a welcome breath of diversity to conventional banking markets. This will lead to a healthier banking system that is open to new entrants operating on core digital models. With the liberalization of the finance market, this has the potential to boost local banking systems by ensuring they remain robust, competitive, and vibrant.

Secondly, the financial inclusivity that digital banking will offer retail and non-retail customers has the potential to empower the next generation of businesses. In the context of trade finance, generally speaking, access has been limited to a few players. This has created a trade-financing hole of around 1.5 trillion dollars globally. As a result, a large proportion of businesses are being underserved. With client-centric banking that bridges this divide, digital banking can open up trade finance to a broader segment of businesses – in doing so, encouraging inclusive economic growth and enabling businesses to stay a step ahead in their operations.

We don’t have to look too far abroad to see the digital banking landscape reaching fruition. In Singapore, the Monetary Authority of Singapore (MAS) recently announced that it plans to issue up to two digital full bank licenses permitting licensees to offer financial services and take deposits from retails customers. Furthermore, MAS will deliver up to three digital wholesale bank licenses. The upshot of this is that licensees will be able to bring financial inclusivity to the masses with the ability to serve small and midsize businesses, as well as other non-retail segments. The momentum of regularly frameworks receiving an overhaul with digital inclinations is also being felt in countries like Australia, China, and the United States’.

By reimagining digital trade finance banking, emerging players can realign the margins of conventionality that are hindering digital transformation and industry-wide innovation. It’s an exciting period in time for bringing financial inclusion to life, as well as diversifying the landscape of offerings and solutions available to customers. Most importantly, what this highlights is that banking on digital finance to flourish is about to pay dividends for all.